Confidence Wanes; Pessimism Stays High
Americans' ratings of their personal finances hit a nine-month low this week, pushing confidence back down after a recent rally. Pessimism for the future economy stayed high for the third month straight in the ABC News/Washington Post consumer survey.
The ABC/Post Consumer Comfort Index, -7 two weeks ago, now stands at -11 on its scale of +100 to -100 – back within sight of its 2007 low of -15 on June 3.
The index is based on ratings of personal finances, the national economy and the buying climate. In a separate measure on expectations, a majority for the third month straight says the economy is getting worse, now 51 percent. Just 12 percent say it's improving.
These results suggest that gas prices – plus the public's generally foul mood, linked to the unpopular war in Iraq – carry more weight than recent gains in the stock market, where the Dow touched 14,000 today. Gas climbed seven cents to $3.05 in this week's U.S. Department of Energy survey, the first significant increase since prices began to ease in late May.
That makes sense: Many people are indirect, buy-and-hold investors, not directly touched by the market's ups and downs; for most, by contrast, gas hits home every day.
INDEX – While positive ratings of personal finances and of buying climate have lost ground, views of the economy overall continue a gradual monthlong climb.
Ratings of personal finances, 55 percent positive, have dropped by 10 points since May and six points over the past three weeks. Ratings of the buying climate, after hugging 40 percent for two weeks, are back in the mid-thirties, where they spent most of spring.
However, 42 percent rate the overall economy positively, up from 37 percent in June.
EXPECTATIONS – As noted, for the third consecutive month, a majority says the economy is getting worse. The most recent previous majority was last summer, when consumers also were hit with a spike in gas prices.
Only 12 percent say the economy is getting better, down from a 2007 high of 18 percent in January before gas headed north.
